December 2021, Vol. 248, No. 12
Global News
Global News December 2021
German Regulator Stalls Nord Stream 2
Germany’s energy regulator suspended the approval process for the Nord Stream 2 project last month because the Swiss-based consortium behind the Russian gas pipeline first needed to form a German subsidiary company to secure an operating license.
“This does push back expected timelines quite a bit,” said analyst Trevor Sikorski at Energy Aspects, adding that it was unclear how long the process of establishing a new company and reapplying for certification would take.
First flows through the pipeline look very unlikely in the first half of 2022, the Sikorski said.
The regulator, the Bundesnetzagentur, said it would only assess an application after a transfer of major assets and budgets for staffing to a German subsidiary.
“A certification for the operation of Nord Stream 2 will only be considered once the operator is organized in a legal shape compliant with German law,” it said.
Nord Stream 2 has faced stiff opposition from the United States and some European states, which say it will make Europe too reliant on Russian gas. But other European governments say the link is vital to secure energy supplies, with gas prices surging in recent weeks and the threat of power outages looming this winter.
Nord Stream 2 said it had been notified by the regulator about the certification decision. “We are not in a position to comment on the details of the procedure, its possible duration and impacts on the timing of the start of the pipeline operations,” it added.
Lawyers said the move, viewed by some gas market traders as politically charged, made sense from a regulatory perspective because it meant the pipeline’s operators in Germany would be answerable to local rules.
Ida Reduced Gas Production More Than Any Hurricane in Past Decade
Hurricane Ida, which made landfall on Aug. 29, was the fifth-strongest recorded hurricane to make landfall in the continental United States. The hurricane caused more natural gas production shut-ins than any other hurricane in the past ten years, and the impacts continue, the U.S. Energy Information Administration (EIA) reported.
At its peak, the disruption to offshore oil and natural gas activity caused by Hurricane Ida resulted in evacuating 288 production platforms and 11 drilling rigs. Fewer facilities were evacuated in advance of Hurricane Ida than for other recent hurricanes. However, the duration of the shut-ins caused by Hurricane Ida, more so than the number of evacuations, contributed to the larger reduction in natural gas production, EIA said.
For the 28 days during which BSEE reported shut-in natural gas volumes because of Hurricane Ida, impaired natural gas production totaled 38.4 Bcf, or 56% of total U.S. offshore natural gas production in a month (when compared with the monthly total production for January of the same year) and 1.2% of total U.S. natural gas production (when compared with the monthly production total in January of the same year).
In comparison, Hurricanes Laura (2020) and Isaac (2012) shut in 18.2% and 20.0% of offshore natural gas production, respectively, and 0.5% and 1.3% of total U.S. natural gas production, respectively, when compared with the production total in January of the respective years.
Israeli Energy Minister Proposes Ending UAE Pipeline Deal
Israel’s energy minister said a deal with partners from the United Arab Emirates (UAE) to transport oil from the Gulf to Europe via Israel should be cancelled because of environmental risk.
The opposition from Energy Minister Karine Elharrar raises doubts about whether the Israeli government will approve the deal, one of the biggest to emerge from the normalization of ties between Israel and the UAE last year.
The deal was signed between Israel’s state-owned Europe-Asia Pipeline Company (EAPC) and MED-RED Land Bridge, a company with Emirati and Israeli owners. The plan was for oil to be unloaded from tankers in the Red Sea port of Eilat and then transferred across Israel in an existing pipeline to the Mediterranean coast.
The companies involved say this land bridge is the shortest, most efficient and cost-effective route to transport oil from the Gulf to the West. But environmental groups have petitioned Israel’s Supreme Court to freeze the deal, citing environmental risk.
Supplies of Egyptian Gas Expected in Lebanon by Early 2022
Egypt is expecting to begin exporting 60-65 MMcf/d to Lebanon by early next year, Egyptian Petroleum Minister Tarek El Molla said.
Egypt will supply the gas, in line with the quantity that Lebanon had requested, “as soon as we can ... we might expect it end of the year, early next year,” Molla told reporters during an oil and gas conference in Abu Dhabi. “We are just (doing) due diligence, checking the pipelines.”
Under a U.S.-backed plan to help ease Lebanon’s power crisis, Egypt will supply natural gas to Lebanon via pipeline through Jordan and Syria.
African Nations Seek Hydrocarbon Growth Despite Global Shift
Several African countries plan to exploit their oil and gas reserves to tackle poverty and energy shortages, representatives gathered in Dubai said, despite growing pressure to end fossil fuel extraction.
Officials and industry executives stressed that Africa has a relatively small carbon footprint, which Statista estimated accounted for 3.7% of global CO2 emissions in 2020.
“We want to develop our resources as Africa, just as our brothers in the West have done,” John Munyes, Kenya’s minister of petroleum and mining, told an oil conference in Dubai that coincided with the United Nations COP26 climate summit.
About two dozen African countries including Angola, Ghana and Uganda pitched their energy sectors to investors during the conference.
PHMSA Places 400,000 Miles of Gas Gathering Lines Under U.S. Oversight
The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) is issuing a final rule that expands federal pipeline safety oversight to all onshore gas gathering pipelines.
The rule, initiated over 10 years ago, expands the definition of a “regulated” gas gathering pipeline that is more than 50 years old. It will, for the first time, apply federal pipeline safety regulations to tens of thousands of miles of unregulated gas gathering pipelines. The final rule will – also for the first time – require pipeline operators to report safety information for all gas gathering lines, representing more than 425,000 additional miles covered by federal reporting requirements.
Historically, gathering lines have been lower-pressure, lower risk, smaller-diameter lines, typically situated in lesser-populated, rural areas. But with the growth of fracking over the last 15 years, gathering lines with diameters, operating pressures and associated risk factors similar to larger transmission lines have become more common.
Taliban Affirm Support for TAPI Gas Pipeline
Afghanistan’s Taliban-appointed government has told Turkmenistan it would ensure the completion and security of the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline which Ashgabat is building in hope of opening new markets.
Geopolitical and security risks have been the key issues for the $10 billion pipeline project since its conception, but the new Kabul government has said it remained committed to it, Turkmenistan’s foreign ministry said in a statement.
Turkmenistan has already built its segment of the pipeline designed to ship 33 Bcm per year. It remains unclear, though, when the remaining length of the pipeline will be built.
Natural Gas Pipeline Project Sues Landowners for Easements
A natural gas company planning to replace pipeline in southeast South Dakota has negotiated easements with most landowners affected by the project after suing some in federal court.
Northern Natural Gas, based in Omaha, Nebraska, brought condemnation suits last month against the owners of 19 tracts of land. All but four have since negotiated easements, the Argus Leader reported.
The company is planning to replace 79 miles of pipeline stretching from South North Sioux City to Sioux Falls that was built in the 1940s and 1950s.
The project started this year and is scheduled for completion by November 2022.
Phillips 66 to Acquire Remaining Stake in Partnership for $3.4 Billion
Phillips 66 said it will pay $3.4 billion to acquire all the units of midstream business Phillips 66 Partners that it doesn’t already own, as it works to simplify its corporate structure.
Phillips 66 Partners was formed by the refiner to own, operate, develop and acquire primarily fee-based crude oil, refined petroleum products and natural gas liquids pipelines, terminals and other midstream assets.
“We believe this acquisition will allow both PSX shareholders and PSXP unitholders to participate in the value creation of the combined entities, supported by the strong financial position of Phillips 66,” Chief Executive Officer Greg Garland said.
The all-stock deal is expected to close in the first quarter of 2022.
Iraq Oil Ministry Says Pipeline to Jordan Needs to Cost Under $9 Billion
The Iraqi oil ministry said the cost of an oil pipeline to Jordan’s Aqaba port city should be brought under $9 billion for the project to go ahead.
Talks between Jordan and Iraq about the project have reached an “advanced stage,” the ministry added in a statement.
Jordan and Iraq agreed in 2012 to construct a pipeline to supply Jordan with crude oil and natural gas. The pipeline would carry crude oil to the Jordan Petroleum Refinery Company’s plant in Zarqa to meet Jordan’s needs and to the Aqaba Port for export purposes.
US Unveils Crackdown on Methane from Oil and Gas Industry
The Biden administration has unveiled a plan to slash emissions of the greenhouse gas methane from oil and gas operations as part of its broader strategy to crack down on climate change.
The plan includes an Environmental Protection Agency (EPA) proposal that would require oil and gas operators to aggressively find and repair methane leaks. Oil and gas operations account for a third of methane emissions.
Specifically, the proposal would require companies to monitor 300,000 of their biggest well sites every three months, would ban the venting of methane produced as a byproduct of crude oil into the atmosphere, and require upgrades to equipment such as storage tanks, compressors and pneumatic pumps.
The EPA rules would most likely take effect in 2023 and would be aimed at slashing methane from oil and gas operations by 74% from 2005 levels by 2035.
Australian Firm Buys German Pipeline Operator Thyssengas
Australian investment bank Macquarie Asset Management said it has agreed to buy Germany’s second-largest gas pipeline operator, Thyssengas, from DIF and EDF Invest to use the company’s grid network to transport climate-friendly gases.
Macquarie, which already owned Thyssengas between 2011 and 2016, did not specify the price, but sources close to the matter told Reuters the sales price was at the upper end or above the 1 billion-1.2 billion euros mentioned by sources in June.
The sellers were reportedly concerned about the fate of natural gas infrastructure in Germany, with some fossil fuels being phased out under tougher climate legislation. Macquarie, however, believes it is advantageous to have gas pipelines with locked-in consumers which stand to gain from investment in and conversion to hydrogen.
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